National Health Service Trust Development Authority (Directions and Miscellaneous Amendments etc.) Regulations 2016.

Baroness Walmsley Excerpts

Tuesday 10th May 2016 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, in moving this Motion, I should make it clear that, in raising issues around the governance of NHS Improvement, I make no criticism of the relatively newly appointed chairman and chief executive of that body, both of whom have outstanding records and have, I know, much to contribute to the National Health Service. I want to raise two sets of issues: the governance arrangements for NHS Improvement; and, linked to that, the future of NHS foundation trusts.

The Motion and the order relate to the National Health Service Trust Development Authority, which was established, as a result of a special health authority order in 2012, to manage the performance of English NHS trusts with the objective of assisting them to become foundation trusts. In contrast, NHS foundation trusts are regulated by Monitor under a number of pieces of legislation, including the Health and Social Care Act 2012. Therefore, both the NHS Trust Development Authority and Monitor are responsible for overseeing and, where necessary, helping to improve the performance of their respective cohorts of providers —NHS trusts and NHS foundation trusts.

The Government have argued that, in recent years, both the NHS TDA and Monitor have been working more closely together and are increasingly utilising similar interventions with their respective cohorts. Last summer, the Government announced that NHS TDA and Monitor would come together under a single leadership and operating model. As part of these arrangements, they would share a single leadership team—comprising the chief exec, chair and a joint board—with the organisations to be known as NHS Improvement. In addition, safety and quality would be key components of the new arrangements, with the national safety function previously exercised by NHS England being transferred essentially to NHS Improvement but formally exercised by the NHS Trust Development Authority.

This seems to be a complex governance arrangement, and no one should underestimate the challenge for NHS Improvement, which has to manage a complex range of functions and accountabilities. Monitor’s duties, as economic sector regulator and its role in ensuring the regulation of foundation trusts, remain risk based and proportionate, in line with the “earned freedoms and autonomy” accorded to the foundation trust model. Alongside that, the function of the NHS TDA in supporting and offering oversight for NHS trusts is equally important in the current, challenging financial climate. Then there are NHS Improvement’s new duties to improve trusts and integrate the safety function formerly hosted by NHS England.

The governance structure is therefore complex. NHS TDA and Monitor remain separate institutions—one a special health authority and the other an organisation established in statute and subject to extensive provision in primary legislation. Indeed, the Health and Social Care Act 2012 contains no less than 85 clauses relating directly to Monitor and about 85 days were spent in your Lordships’ House debating them. There is no clause relating to the NHS Trust Development Authority because it is a special health authority, yet it seems to be the principal vehicle by which functions are to be transferred to NHS Improvement.

NHS Improvement is itself subject to no legislation, but a board using its name as a banner will oversee both the NHS TDA and Monitor with the same executive team and operating procedures. My understanding from what has been said is that, in statute, Monitor and the TDA will continue to have their own boards but these will have identical membership and meet as one NHS Improvement board. They will also continue to publish separate annual reports alongside an aggregate report from NHS Improvement. To all intents and purposes, NHS Improvement will operate as one board, with one set of staff and operating procedures, but the legislative provisions under which it operates will be quite separate for NHS foundation trusts and NHS trusts.

I ask the Minister how realistic it is to expect staff to work under a single operating procedure, given the hugely different legislative provisions relating to foundation and non-foundation trusts, unless the market and competition provisions in the 2012 Act are effectively ignored. The King’s Fund, in its analysis of the planning guidance for 2016-17, has said that it effectively spells the end of the emphasis on competition and the principle of autonomy.

Linked to this is the question of the future of NHS foundation trusts. In effect, if FTs and non-FTs are treated in the same way, overseen by the same board, the same members of staff and the same operating procedures, what on earth is the point of being a foundation trust? What will happen to non-FTs that were in the pipeline to gain FT status—what is the point of them applying? I raise this question as an unashamed supporter of the concept of NHS foundation trusts. I think they were the right approach and I am convinced that their governance model, whereby the board is accountable through the governing body to local members, has many advantages.

The noble Lord, Lord Prior, was a distinguished chairman of a very successful foundation trust, and I had a similar experience. While, having been the chairman of a board, I can say that meetings of the governing body were not always comfortable, I thought it was a strength that the board had to account to local people for its performance. Of course, that is not the situation for non-foundation trusts but, if I were now the chairman of a non-foundation trust, I could not see what advantage there would be to me in becoming a foundation trust, because essentially the economic regulator would manage my trust in the same way as it would a foundation trust. At least, that seems to be the implication of the regulations and the changes made to NHS Improvement.

I have seen an intimation that, following these regulations, there will be no further pieces of legislation in relation to operating procedures. I ask the noble Lord, Lord Prior, why that is and whether he can assure me that, with the same group of staff and the same board, the autonomy and independence of foundation trusts, as opposed to NHS trusts, will be respected. I also ask him how this then relates to the development of the strategic transformation plans at local level, which on any reading also signals to me that we are moving back to a planning model of the health service. Again, it would be very interesting to get the Minister’s comments on that. Above all else, I hope that he can reassure me that the Government are still committed to the model of foundation trusts, particularly regarding the strength that it brings to local autonomy and governance. I beg to move.

[Baroness Walmsley (LD)]

My Lords, I have no intention of detaining the Committee, as I agree with everything that the noble Lord, Lord Hunt, has said. I look forward to hearing the Minister’s reply. I am particularly concerned that a very complex system of governance will not produce transparency and accountability, and I look forward to reassurance on that score.

[The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con)]

My Lords, that was a short intervention from the noble Baroness. I was very struck by the noble Lord, Lord Hunt, saying that, when the 2012 legislation went through Parliament, it took 85 days and 85 of the Bill’s clauses dealt with Monitor alone. I am afraid that that is part of the response that I shall give him today. We did not have 85 days—or maybe 165 days, if we take into account the TDA and the restructuring—because matters are too urgent. However, the noble Lord is right to bring this issue up today, because I do not think that there has been enough scrutiny around Monitor, the TDA and NHS Improvement.

Responding to the points that he raised about foundation trusts will perhaps in part answer both questions. The distinction between foundation trusts and trusts has been eroding over time—there is no question about that. The roles of Monitor and the TDA were becoming more duplicated over time. It is interesting that, when David Bennett was at Monitor, he saw the need to develop an improvement agency within Monitor, almost mirroring the TDA. Simply being a financial and economic regulator was clearly not enough at a time of such huge stress and pressures within the system.

However, there are two other important factors that I should mention. At the time, I agreed that the principle of foundation trusts—I think it was called “earned autonomy”—was absolutely right, as was the governance structure, with clear accountability through locally elected and appointed governors to the local population. But when the King’s Fund says that what we now have is the end of competition and autonomy, it is partly right. Using competition as a means of driving improvement through the NHS has been tested almost to destruction. It started back in 2005-06, with the new Labour Government and ISTCs, foundation trusts and the like. Increasingly, we are of the view that competition has a role to play but a pretty limited one, and we cannot rely upon competition—or the market, if you like—to drive the kinds of improvements and change that are needed within the system.